Oil Spill: Kenneth Feinberg Makes the Final Rules for Spill Settlements. But Are They Fair?

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Kenneth Feinberg. Matt Slaby for TIME

There are people who have tougher jobs in the world, like sergeants in Afghanistan or maybe the coach of the 76ers. But Kenneth Feinberg doesn’t have it easy. The Boston-bred lawyer took over the Gulf oil spill claims process in late August, and since then he’s managed to be criticized by nearly everyone in the Gulf Coast region. Feinberg, who ran the relatively successful 9/11 Compensation Fund, is charged with reviewed damage claims from individuals and businesses up and down the Gulf Coast who feel they were economically injured by the spill. Louisiana shrimpers, Alabama seafood joints, Florida mega-resorts—Feinberg has so far received nearly 500,000 claims for emergency aid, with about half coming over the past month, and he’s so far paid about more than $2.2 billion to 150,000 individuals and businesses. And that was the easy part—with the window for emergency claims closing on November 22, Feinberg will shift the claims process to the even more difficult task of settling final claims from the spill, and eventually closing the books on the BP spill.

As pat of that shift, Feinberg today released the final protocol for spill claimants, the rules that will outline what does and doesn’t count as billable damage—and the strings attached to any settlement. For those who’ve been following the claims process—or who’ve heard Feinberg speak at any of the dozens of town hall meetings he’s held with affected residents since July—there’s not a lot new in the protocol. Now that the emergency aid period is finished, claimants have a choice—either make their claim to Feinberg for a final payment based on the damage they’ve suffered (decided by Feinberg, though with a chance for appeal), or they can take their chances with the courts and sue BP directly. They can’t do both—a claimant who receives a final payment waives their right to sue BP or anyone else for damages. That means claimants—who have three years to decide whether or not to try for a final claim—will have to make a judgement call about the extent of their economic damage now, even though scientists including National Oceanic and Atmospheric Administrator Jane Lubchenco believe it is far from clear now how extensive the long-term ecological and economic damage from the spill will be.

Unsurprisingly, plaintiff lawyers have attacked Feinberg for the limitations he’s put on the claims process:

Stephen J. Herman, a member of the steering committee of plaintiffs’ lawyers in the litigation, said that people filing claims needed to know more details about how the process would work — “these are the claims we pay or don’t pay, this is the basis we use to determine compensation,” he explained.

Another member of the steering committee, James Roy, criticized the general release of all companies involved in the spill.

“Thousands of individuals and businesses will be victims of BP a second time if Mr. Feinberg requires releases of punitive damages and claims against the other parties,” he said.

Feinberg has softened this rule somewhat. Instead of only be able to opt for a final payment, claimants have the option of continuing to receive quarterly interim payments based upon document past damage from their emergency claims, while they weigh making a final claim—though Feinberg noted in a statement today that “there is no guarantee that, in the future, a lump sum Final Payment will be as generous as it will be currently.” In other words, you’re taking a calculated risk no matter what.

The other controversial part of the protocol has to do with the role that a claimants proximity to the actual oil will play in their claim. To quote from the document:

The GCCF (Gulf Coast Claims Facility) will only pay for harm or damage that is proximately caused by the Spill.

That means businesses far from the main spill that experienced a dropoff in revenues—like hotels in parts of Florida, relatively unscathed by the oil, that nonetheless suffered when tourists steered clear of the Gulf Coast this summer—might not be able to make a successful claim. Feinberg has flip-flopped a few times on this issue. Initially he said that proximity would play a major role in judging the claims, then in October he seemed to reverse himself. What’s clear is that under the Oil Pollution Act of 1990—which effectively governs the claims process—businesses can be disqualified from making a claim if they’re not actually touched by the oil. But that law was made in the wake of the 1989 Exxon Valdez spill in isolated Alaska, where most of the damage was borne by fishermen who could no longer fish, and businesses directly impacted by the oil. In the Gulf spill, however, there’s little doubt that the event caused major economic damage to the tourism industries of states like Alabama and Florida that were lightly touched by the oil.

Some hotel groups have indicated that they might try to sue BP rather than go through the claims process, but Feinberg believes they won’t have much luck. He included as an addendum to the protocol a 54-page memorandum by Harvard Law Professor John C. P. Goldberg that argues courts would reject such claims under the Oil Pollution Act. (Download a PDF of the memo here.) It’s not hard to see why Feinberg included the paper—by denigrating the chances for such plaintiffs in the courts, he’s trying to channel them towards the claims process.

Indeed, that’s been one of Feinberg’s top priorities all along—make the claims process more attractive than litigation, to save the court system from potentially hundreds of thousands of suits over the spill. It’s an admission, though, that this isn’t even primarily about justice—it’s about getting the people of the Gulf back on their feet as soon as possible. To those who suffered and continue to suffer from the spill, that can sound heartless, even maddening. But it might be the right course of action. I wrote back in July that sociology studies from the Exxon Valdez have shown that being involved in long, drawn-out litigation was a major predictor of sustained stress levels. And Feinberg recognized that:

“The people of Louisiana are pretty resilient,” he said at a town-hall meeting in Port Sulphur [in July]. “Get a check, and move on as best you can.” It’s not fair, but for the sake of their psyches — and their children’s — it might be the best advice they are going to get.

Sad as it is, there may not be much more to hope for than that.